Part 2: Situational Analysis
The situational analysis is designed to take a snapshot of where things stand at the time the plan is presented. This part of the Marketing Plan is extremely important and quite time consuming. For many, finding the numbers may be difficult, especially for those entering new markets. The situational analysis covers six key areas: product, target market, distribution, competitors, financial and other issues.
1.Describe the main product features, major benefits received by those using the product, current branding strategies, etc.
Pricing
a.Describe pricing used at all distribution levels such as pricing to final users and to distributors, incentives offered, discounts, etc.
b.Distribution
c.Describe how the product is made accessible to final users including channels used, major benefits received by distributors, how product is shipped, process for handling orders, etc.
Promotion
Describe promotional programs and strategies in terms of advertising, sales promotion, personal selling and public relations, how product is positioned in the market, etc.
Services Offered [AUGMENTED PRODUCT]
Describe support services provided to final users and distributors before, during and after the sale
2. Describe the Target Market(s)
Examine in detail the company’s target market(s).
Describe the target market approach:
-What general strategy is used to reach targeted customers? Generally approaches include:
a.mass market – aim to sell to a large broad market
b.segmentation approach – aim to selectively target one (niche) or more markets
Describe demographic/psychographic profile of the market:
Profile criteria may include:
gender, income, age, occupation, education, family life cycle, geographic region, lifestyle, attitudes, purchasing characteristics, etc.
Describe the following characteristics of targeted customers:
Needs/benefits sought by market
Product usage
Consider answers to these questions related to customers using the product such as:
a.who is using the product?
b.why do they use the product?
c.when do they use the product?
d.how is the product used?
Product positioning
Evaluate how customers perceive the product in relation to competitor’s products or to other solutions they use to solve their problems
Attitudes
a.What is the target market’s attitude regarding the company’s product?
b.What is the target market’s attitude regarding the general product category?
Describe the purchasing process:
a.How does the target market make their purchase?
b.What does the decision-making process involve?
c.What sources of information are sought?
d.What is a timeline for a purchase (e.g., impulse vs. extended decision-making)?
e.Who makes the purchase?
f.Does user purchase or is other party responsible (e.g., parent purchasing for children)?
g.Who or what may influence the purchase?
Provide market size estimates:
Keep in mind these are estimates for the market not for a specific product
Provide size estimates for the potential market
What is the largest possible market if all buy?
Provide estimates of size for the current target market
What percent of the potential market actually purchased?
Provide estimates of future growth rates
At least through the timeframe for the plan (e.g., 1 year) but most likely longer (e.g., 3-5 year projections)
FOR INFORMATION ONLY:
2. Describe Current Distributor Network (INTERMEDIARIES)
Evaluate how the company’s product(s) is distributed. Clearly marketing plans for a service company may not have much detail here but this section will most likely have some relevance even for service firms
3. Describe the channels/supply chain employed to sell and deliver the product: (Note: internal sales force discussion should appear under company promotion in Current Product Analysis above.)
Options may include:
a. direct to customer
b. indirect via a distributor
c. combination of both
4. Competitive Analysis
Examine the main competitors serving the same target market.
Describe direct competitors in terms of:
a. Target markets served
b. Product attributes
c. Pricing
d. Promotion
5. Financial Analysis for Product or Product Line
Much of this information can be handled within a graphical format, such as tables and graphs, though a paragraph explanation of each is generally required. Make sure to include total dollar (or other currency) amounts as well as percentage market share. For more detailed marketing plans or for plans for seasonal products, providing monthly or even weekly sales figures may be required. Provide a spreadsheet-style layout showing detailed breakdown of marketing revenues and expenses. (Length: 2-4 pages).
Current Sales Analysis
1. Overall industry sales and market share (for at least the last year)
2. total market sales
3. total for company’s product(s)
4. total for competition
By segments/product categories
5. total for segments/product categories
6. total for company’s product(s)
7. total for competition
Profitability Analysis
1. Revenues/SALES, COSTS, PROFIT
For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.
2. Marketing Expenses
Types:
1. Direct – those expenses that can be tied to the product
2. Indirect or Proportional – generally administrative or broad marketing expenses that may be assigned to a product based on some established criteria (e.g., a product’s percentage of overall company sales) Note: not all companies follow this approach
For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.
6. Environmental Problems and Opportunities
Describe trends, events, conditions that are external (usually uncontrolled by the company) that may impact the company’s product(s) or the market. (Length: 1-2 pages)
Areas of consideration:
1. social and cultural
2. demographic
3. economic
4. technological
5. political
6. legal, regulatory, ethical
7. Product/Market Analysis Tools
In an effort to provide an easy to visualize summary of the product(s) consider using one or more of the following commonly used product/market analysis tools.
8. Summary of Current Situation
Summarize all information in the Situational Analysis.
Provide a SWOT analysis for the company’s product(s) that includes:
Strengths, weaknesses, opportunities, threats, Actions